As the US oil sector recovers from several challenging years, attention has been turning to US oil rig counts as a barometer of the health and productive capacity of the US oil industry. Even before the pandemic, the US oil rig count had been in decline from its October 2014 high of 1609 units to 667 by March 2020 and a current count of 556. Shale producers are now focused on reducing CAPEX and creating value for investors through M&A and share dividends. Whilst 2021 and 2022 saw growth in rig numbers, 2023 has been challenging. Inflationary pressure, labour shortages and concerns about oil demand have all played a role in seeing rig counts fall once again. The use of operating revenue for share buy backs and dividend increases instead of additional E&P expenditure is likely adding to falling rig counts.
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